Friday, January 13, 2017

Corbyn is right - proud that my fat cat pay campaign against the CIPD paid off

Corbyn has come under attack for his wibbly-wobbly performance
on top pay. Oh how some liberals I know, who pretend to care about the poor,
mocked him on social media. But for me, he was on the money. To my mind, this
needs urgent attention. First use the lever of public funding and contracts,
second use ratios (around 20:1 with checks on range), along with caps.

The blog is mightier than the sword

Not a lot of people know this (to be said in Michael Caine
accent) but in 2010 I was single-handedly responsible for slashing fat cat pay
in a major institution, through blogging. It was the CIPD. I read the accounts
and pointed out that the CEO salary was just short of £500k. Not bad for an
organisation whose commercial revenue had plummeted (down 23%), research
contracted and ridiculed (down 57% & report pulled), magazine imploded
(down 83%), investment returns bombed (down 74.7%) and a membership who were
angry and alienated about a command and control culture that left them with
less services and starved of cash. There was also the issue of an odd and
overpriced acquisition (Bridges
Communications) and a blatant falsehood on her CV on the CIPD website. It seemed outrageous that the leading organisation in 'personnel', that often opines on exective pay, should be taking such liberties. You can
read this in detail here.

This caused a shitstorm. The CIPD Chair chipped in to defend the claim but it
simply exposed the fact that the fat cat stuff had been going on for years, when it was shown that the previous CEO, Geoff Armstrong, had also eared a cool
half a million. You can read the ludicrous defence here.

What happened next was comical. Personnel Today picked up on
my Jackie Orme story and laid out the case with a link to my blog along with an
official response from the CIPD and got a survey going (see story here). Does CIPD CEO deserve
£87,000 bonus? Result : NO 94%, YES 6%! Pretty conclusive and things changed very
quickly. To cut a long story short, the current CEO of the CIPD, Peter Cheese, earned
£250k last year. Result.
This is one of the reasons I never ever joined the CIPD and never will. I have a healthy distruct of membership organisations that usually turn into not serving their emmbers but the staff of the institution itself. Needless to say, from that day the CIPD has never invited me to any event or conference or involved me in any project. It was worth it. Call them out - it can work as they hate the publicity. The moral of this story, is to use the power of the pen to
attack these people personally and the Remuneration committees that support
these extortionate salaries (and bonuses) (and other benefits). Believe me, it
is extortion. I’ve been on these boards. It is literally extortion from the
public purse.

Universities

The first target should be the Universities. The pay at the
top has sprinted ahead of the pack. Last year the Russell group got an average 6% pay rise taking their average annual package to an average of £366,000. All of this on the back of the widespread and
indefensible exploitation of part-time and low paid teaching staff. This is a
disgrace. There’s also the issue of minimum wages right at the bottom. Don’t
imagine for one minute that academe is in any sense a beacon of equality or
morals. They’re rapacious at the top. Given that they receive huge amounts of
public money, a large chunk through student fees, which is in effect government
backed loans, which they are not responsible for collecting, we have an easy
lever here. Get those ratios working or your funding gets questioned.

Charities

I’ve also been a Trustee on some very big educational
charities. They pull every trick in the book. On the whole these are low growth
high reward environments, where bonuses are awarded for the merest fart of
effort. If the law changes on pensions, they’ll simply give top-up cash awards
to compensate the CEO. Imagine doing that for all employees? It would simply
negate the whole point of tax adjustments. Then there’s the inevitable remuneration
consultancies, who basically lie about benchmarking to keep the whole show on
the road. It’s easy - you say that the average salary in this field is X – so
we need a minimum of X. That simply reinforces the falsehood and perpetuates
the upward spiral. It literally keeps the whole fat cat thing going. It’s both
mathematically stupid and morally bankrupt. Let me tell you, these charities
largely exist on the back of Government grants and the pay at the top can be
obscene. The worst are Healthcare organisations but education is a close
second. The Charity Commission is populated by establishment figures who keep
the whole racket going. It has the teeth of a geriatric and agility of a slug.

Pay-offs

This is a big one. Annual salaries to charity chiefs can
rise to sums in excess of £830,000. The worst are healthcare trusts but many
are guilty here. There should be an immediate cap on these golden goodbyes.
It’s disgusting that the people who often trim organisations through staff
cuts, with little compensation when they leave, are led by those who literally
raid the coffers when they leave. In Local Government, this is often because
they’re sacked or out of favour. This undermines voter faith in democracy.

Ethical punishment

For audit companies and consultancies that play the tax
evasion game, and are found to be encouraging others, let’s cut them out of
access to the public pie. If you’ve been setting up Luxembourg companies to
evade UK tax – then sorry, UK business doesn’t come your way.

But the big levers are funding, contracts, jobs and gongs. Let me explain.
Government funds business in all sorts of ways with subsidies and financial support for research, marketing, innovation, R&D tax credits and so on. These could be linked to ethical considerations around pay, especially for CEOs. Deloittes were recently cut out of Government contracts for six months, due to a leaked memo. The same principle could be applied to measures on pay. Companies could also be disbarred from hiring Civil Servants, who give access to Government ministers and contracts. You've probably never heard of Avoba, but it is the advisory committee responsible for business appointments. The DfE has always been guilty of this revolving door problem. A good example id David McVean, who went to E-ACT, an academy chain which was slammed last year for failing its pupils. Claudine Menash Jones is another academy migrant, this time at the King's Group. These were Director level Civil Servants. The last measure would really hurt them and that's disbarrment from the Honours list. Education bods LOVE gongs. The very thought of a garden party turns them into fawning fools. There's no end of possibilities here, all it takes is some imagination and balls.

Conclusion

Let’s apply
some reason, metrics and funding pressure on both the private and public sector
on fat cat pay. This hurts no one but sets moral and fiscal standards for
organisations that make employees and voters feel that they’re in a democracy
that cares about merit. We can then focus on increasing security of employment,
minimum wages rises an, in general, reducing inequality.

2 Comments:

I hadn't known about your CIPD campaign - belated congratulations and thanks. I had heard about the conflicts of interest that can happen when charities become service-providers through the brilliant activism of the #JusticeforLB campaign eg Mencap https://mydaftlife.com/2015/07/27/we-need-to-talk-about-mencap/

I agree that levels of top pay are ridiculous and based not on performance but on self interest. What is less clear is what to do about it and how to get voter support behind change. Your own CIPD campaign was very successful and might woŕk for charities and universities. We should try it. But can it be replicated in the private sector? I doubt it. Here popular support and a sustained sense of determined outrage are important. That needs a canny approach to the press and work at the grass roots level. This is where Corbyn failed. Whatever his policies may have been the headline was "100% tax rate". Like Saatchi's "Double whammy" poster that has pretty much killed the idea for now. Happy to have a further conversation over this important issue any time.